Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 6, Problem 3.1P
(a)
To determine
How the consumer’s
(b)
To determine
Income and substitution effect of trip.
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Anne has a job that requires her to travel three out of every four weeks. She has an annual travel budget and can travel either by train or by plane. The airline on which she typically flies das a frequent-travel program that reduces the cose of her tickets according to the number of miles she has flown in a given year. When she reaches 25,000 miles, the airline will reduce the price of her tickects by 25 percent for the remainder of the year. when she reaches 50,000 miles, the airline will reduce the price by 50 percent for the remainder of ther year. Graph Anne's budget line with train miles on the vertical axis and plan miles on the horizontal axis
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3.15 Mandy is ordering a set of football tickets for the coming season. She plans to
sell the tickets to make some money. There are two types of tickets: tickets for
road games and tickets for home games. For each road game ticket, she could
make a profit of $150, and for each home game ticket, the profit is $50 on
average. The ticket office offers two price options:
(a) $5/home ticket, and no more than $50 purchase per person; $50/road
ticket, and no more than $300 purchase per person.
(b) $7.5/home ticket, and no more than S100 purchase per person; $45/road
ticket, and no more than $250 purchase per person.
How many tickets of each type should Mandy purchase so as to maximize the
total profit she can make?
You are a University student who must live off-campus in the second year. There are two types of one-bedroom apartment where you prefer to live because it is near the campus. One rents for $400 per month and the other $360. According to the University Students’ Housing Bureau 80 percent of apartments in the area consists of the $400 type while the remaining 20 percent are of the $360 type. You need to visit the apartments to discover the rent. Suppose the first apartment you visit cost $400 and the opportunity cost of your visit is $6 per visit.
1. If you are risk neutral person should you visit another apartment or rent the one you have found.2. Suppose you visit another apartment and find out that it rents for $400, should you visit another apartment?
Chapter 6 Solutions
Principles of Economics (12th Edition)
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